The Importance Of Accurate Retention Tracking For All Builders

Retention is the percentage of progress payments that are withheld by a client to prevent breaches of contract and to ensure project completion and quality satisfaction.

This is how retention works: First off, the percentage and terms of payment should be indicated in the construction contract. Afterward, the client will retain the remaining payment until the project end date. Finally, when the project is finished, the remaining payment will be dispensed by the client to the builder.

Although agreeing to retention withholding can increase the trust of your clients in your commitment to providing excellent services and accountability, it exposes you to financial risks.

In fact, according to The West Australian, fair payment has been an issue in the building industry for decades already, including slow and non-release retention monies.

Transparency

Transparency is one of the most important factors in every transaction. It is mutually beneficial to both parties because clients want to pay the right amount, and builders want to receive the right amount as well.

Although transparency is a business buzzword and encountering dishonest clients is not likely, it’s not enough reason to be complacent because there are still some who might take advantage of the situation if you’re not keeping a close eye on your finances.

Using an accurate retention tracking system will enable you to spot any fraudulent act done by the client.

Prevention of cash flow problems

Since most construction workers are paid on an hourly basis, and you have other employees and office bills (whether it’s mortgage, rent, office equipment, or electric and water bills) to pay as well, you need a regular cash flow to sustain your business.

One of your financial sources are retentions, that is why you need to avoid delays in receving a retention payment. Otherwise, your budget might fall short and leave you with no choice but to borrow money for the sake of paying the bills (which might get you stuck in a pile of debt—it’s a domino effect.).

Through accurate retention tracking, you will be able to monitor your retention schedule and remind your client about it. You can also monitor it along with your bills payment schedule and check whether it matches. Knowing it beforehand will help you balance your finances through cost-cutting and other money saving practices in case the retention schedule falls behind your bills payment schedule.

Smooth transaction

By using an accurate retention tracking system, you can prevent future transaction problems that may lead to arguments and lawsuits by balancing the financial situation.

If before, your client has the upper hand because he/she has your money, now, the power is distributed because you already have the ability to know what happens to your money and make sure that they will follow the terms of payment indicated in the contract.

Just remember to remind your clients (that you’re tracking the retention) in a nice way (not in an “I’m-keeping-an-eye-on-you!” kind of way.).

BizPrac software for builders comprises of different functions for effective construction management including builder retention management.

Sources:

Testimonials

“We needed to find a program that had comprehensive job costing & accounting features, attached to a powerful but easy to use estimating program. We tried at least 3 other of the leading program brands and found Bizprac to be by far the most user friendly, without compromising critical features or functionality. Bizprac allows us to keep track of the ongoing jobs and keep’s our job claims up to date. Bizprac has allowed us to spend much more time onsite doing the job and way less time on the computer.

Whenever we need help Bizprac support staff are friendly and easy to contact. Also when we suggest new features or changes to the program, they are reviewed and added if other customers have the same request. So the combination of Bizprac’s feature-set, ease of use, and readily available support, meant going with Bizprac was a no brainer.”

Peter Ceccato
Ceccato Builders

“At our previous employer, a large building company, we became familiar with the functionality of a large construction software product from Sage. So when we went to the market to look for software, our aim was to find similar functionality at a fraction of the price. We knew it was a tall order. The only product that provided the full functionality was Bizprac. Bizprac was built by builders for builders and this was evident to us when we reviewed the product. We were very impressed with the value for money that Bizprac provided and now that we have started to use it, we’re also impressed with the support and ease of use. We’re very happy with Bizprac!”

Rafal Zuliamis
Lares Homes

“Being a builder and owning our own business, it is critical for us to have a building software package that can assist me to maximise all areas of efficiency in the business. The Bizprac system allows us as a business to manage the building and construction side as well as maintaining an up to date record of how we are tracking financially. Having a system that works well with us allows us to deliver high-quality service to our customers and suppliers at a competitive rate. we are equally impressed with the team from Bizprac administration and help desk who are always able to assist us with any inquiries or further training to maximise our program use.”

Peter Casey
Casey Builders

“I’ve been using Bizprac for 20 years. I like it because it’s easy to use and I can cost jobs easily. I went on holidays for seven months and, using Bizprac, I was able to run the business remotely”

Peter Roy
Additional Concepts

The Importance Of Accurate Retention Tracking For All Builders

Transparency

Prevention of cash flow problems

Smooth transaction

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